New Filing Requirements for MSMEs: Disclosing Registration and Status in ITR Forms 5 & 6
Micro, Small and Medium Enterprises (MSMEs) in India now face a new requirement when filing their income tax returns: disclosing their MSME registration number and recognition status in Forms 5 and 6. This change, effective April 1, 2024, aims to improve data collection and streamline government support for MSMEs.
What’s New?
Previously, MSME registration details were not mandatory for ITR filing. Now, businesses filing ITR-5 (for individuals, Hindu Undivided Families, and Business Partnerships) and ITR-6 (for companies) must provide:
- MSME Registration Number: The unique identification number obtained during MSME registration on the Udyam portal.
- Recognition Status: Whether the business is classified as Micro, Small, or Medium according to the MSME definition based on investment and turnover criteria.
Why the Change?
This new requirement serves several purposes:
- Accurate Data: It helps the government gather comprehensive data on the MSME sector, aiding in policy formulation and targeted support programs.
- Transparency and Compliance: It promotes transparency and ensures that only eligible businesses claim MSME benefits.
- Streamlined Support: It allows the government to identify and directly reach qualified MSMEs for relevant schemes and initiatives.
What MSMEs Need to Do:
- Register on Udyam Portal: If not already registered, MSMEs must obtain their MSME registration number through the Udyam portal (udyamregistration.gov.in).
- Determine Recognition Status: Businesses need to understand their classification as Micro, Small, or Medium based on the current MSME definition (msme.gov.in).
- Update Tax Forms: During ITR filing, ensure accurate disclosure of the registration number and recognition status in the designated fields of Forms 5 and 6.
Additional Information:
- This requirement applies to all income tax returns filed for Assessment Year 2024-25 onwards.
- Failure to disclose the required information may lead to scrutiny or potential penalties.
- For queries or assistance, consult a tax professional or refer to official government resources.
Impact and Implications:
This change is expected to impact millions of MSMEs in India. While it adds a new step to the tax filing process, it also signifies the government’s increased focus on supporting and tracking the MSME sector. By ensuring accurate data and compliance, this initiative could lead to more effective policy interventions and targeted benefits for MSMEs, ultimately contributing to their growth and development.
(The author is Naveen Panwar, and the views expressed in this article are his own)
